Are people afraid you're buying it? Can Yang Zhongli take over the sword?
Yang Zhongli Shuangxiong's stock price plummeted? Let's see what the market says about whether they should pick up the knife or not.
In which, $YTLPOWR (6742.BMS)$Yang Zhongli Electric's profit performance declined quarterly. Most investment banks believe that its stock price trend will also slow down, and they have downgraded the stock rating to “hold on” or “follow the market.”
Galaxy Securities analysts pointed out that due to a quarterly decline of 18% in the profit contribution of the Singaporean subsidiary Power Seraya in the 3rd quarter of fiscal year 2024 (up to the end of March) and the expansion of telecom business losses, Yang Zhongli Electric's net profit for the 3rd quarter also began to fall from its peak, falling 16% from quarter to quarter.
“Power Seraya's net profit performance began to return to normal in the 3rd quarter. At the same time, the telecom business faced the impact of the decline in project revenue and increased losses, which was enough to offset the narrowing of Wessex Water's losses and the contribution of the affiliate company to more profits.”
The analyst also said that Power Seraya's electricity retail revenue declined quarterly due to renewed power supply contracts, which offset higher electricity sales brought about by hot weather in the 3rd quarter.
As for the outlook, the analyst did not change Yang Zhongli Electric's future profit expectations. He still predicts that Power Seraya's profit will continue to fall back to normal levels, but the recovery in Wessex Water's performance, combined with contributions from the data center business beginning in the second half of fiscal year 2025, is expected to mitigate the impact of the decline in Singapore's power generation profits.
Overall, the analyst raised Yang Zhongli Electric Power's target price from RM4.50 to RM5.50. However, since its stock price has surged 356% from the beginning of the year to date, the rating was downgraded to “hold”.
“Power Seraya's net profit performance began to return to normal in the 3rd quarter. At the same time, the telecom business faced the impact of the decline in project revenue and increased losses, which was enough to offset the narrowing of Wessex Water's losses and the contribution of the affiliate company to more profits.”
The analyst also said that Power Seraya's electricity retail revenue declined quarterly due to renewed power supply contracts, which offset higher electricity sales brought about by hot weather in the 3rd quarter.
As for the outlook, the analyst did not change Yang Zhongli Electric's future profit expectations. He still predicts that Power Seraya's profit will continue to fall back to normal levels, but the recovery in Wessex Water's performance, combined with contributions from the data center business beginning in the second half of fiscal year 2025, is expected to mitigate the impact of the decline in Singapore's power generation profits.
Overall, the analyst raised Yang Zhongli Electric Power's target price from RM4.50 to RM5.50. However, since its stock price has surged 356% from the beginning of the year to date, the rating was downgraded to “hold”.
“In our opinion, in terms of current stock prices, the market has valued Yang Zhongli Electric Power's data center business at RM12.5 billion. However, the occupancy rate of the company's data centers needs to be further increased before we can readjust its rating.”
According to information provided by Yang Zhongli Electric Power, analysts said that Donghai Group (Sea Ltd) officially entered Yang Zhongli Electric Power's green data center park on May 10 and obtained the first batch of 8 megawatts (MW) of power (Donghai Group determined a total of 32 megawatts) data center production capacity, while the remaining production capacity will be rolled out on an average basis between 2025 and 2027.
“As for the remaining 16 megawatts of power production capacity in the first phase of the project, Yang Zhongli Electric Power is actively discussing with two potential customers.”
She also quoted Yang Zhongli Electric as saying that the construction of the additional 100 MW data center is progressing smoothly and is expected to be completed by the end of this year, and the company has also received inquiries from some interested potential customers.
In addition to Galaxy Securities, Bank of Malaysia Investment Bank and Kennag Investment Bank also both downgraded Yang Zhongli Electric Power to “hold on” and “follow the big market” based on valuation factors, while the target prices were RM5.20 and RM5.22, respectively.
Under the emotional impact of the downgrades of investment banks and the sharp drop in the US stock market overnight, Yang Zhongli Electric Power and the parent company Yang Zhongli Agency $YTL (4677.BMS)$(Shares both fell sharply this morning.
Among them, Yang Zhongli Electric Power once plummeted 61 cents, or 11.34%, to RM4.77, while Yang Zhongli's agency dropped to RM3.53, or 9.02%.
Yang Zhongli's institutional stock price trend follows Yang Zhongli Electric
Galaxy Securities analysts believe that Yang Zhongli's institutional stock price trend will follow Yang Zhongli Electric Power, so although the company's profit expectations and target price were raised to RM3.88, the rating was also lowered to “maintain.”
“The Longxin High Speed Rail (HSR) will be Yang Zhongli's biggest future benefit, but the company's 72% forecast profit before tax for the current fiscal year, and 51% of the valuation comes from the utility business. Therefore, we believe that the current stock price trend of Yang Zhongli Agency will be consistent with Yang Zhongli Electric Power.”
The analyst estimates that the consortium led by Yang Zhongli's agency is one of the three candidates selected by the government for the Longxin high-speed rail.
“We are optimistic about Yang Zhongli Foundation's bid opportunities because the company has been preparing for the Longxin high-speed rail project since 2009, has a pioneering advantage, also has experience in building the Jinmath-Johor Bahru dual-gauge electric train, and may cooperate using the existing Airport Express Rail (ERL) franchise.”
In any case, analysts pointed out that until more details about the Longxin High Speed Rail are released, it is still too early to evaluate the potential value the relevant projects will bring to Yang Zhongli's agency.
“As for the remaining 16 megawatts of power production capacity in the first phase of the project, Yang Zhongli Electric Power is actively discussing with two potential customers.”
She also quoted Yang Zhongli Electric as saying that the construction of the additional 100 MW data center is progressing smoothly and is expected to be completed by the end of this year, and the company has also received inquiries from some interested potential customers.
In addition to Galaxy Securities, Bank of Malaysia Investment Bank and Kennag Investment Bank also both downgraded Yang Zhongli Electric Power to “hold on” and “follow the big market” based on valuation factors, while the target prices were RM5.20 and RM5.22, respectively.
Under the emotional impact of the downgrades of investment banks and the sharp drop in the US stock market overnight, Yang Zhongli Electric Power and the parent company Yang Zhongli Agency $YTL (4677.BMS)$(Shares both fell sharply this morning.
Among them, Yang Zhongli Electric Power once plummeted 61 cents, or 11.34%, to RM4.77, while Yang Zhongli's agency dropped to RM3.53, or 9.02%.
Yang Zhongli's institutional stock price trend follows Yang Zhongli Electric
Galaxy Securities analysts believe that Yang Zhongli's institutional stock price trend will follow Yang Zhongli Electric Power, so although the company's profit expectations and target price were raised to RM3.88, the rating was also lowered to “maintain.”
“The Longxin High Speed Rail (HSR) will be Yang Zhongli's biggest future benefit, but the company's 72% forecast profit before tax for the current fiscal year, and 51% of the valuation comes from the utility business. Therefore, we believe that the current stock price trend of Yang Zhongli Agency will be consistent with Yang Zhongli Electric Power.”
The analyst estimates that the consortium led by Yang Zhongli's agency is one of the three candidates selected by the government for the Longxin high-speed rail.
“We are optimistic about Yang Zhongli Foundation's bid opportunities because the company has been preparing for the Longxin high-speed rail project since 2009, has a pioneering advantage, also has experience in building the Jinmath-Johor Bahru dual-gauge electric train, and may cooperate using the existing Airport Express Rail (ERL) franchise.”
In any case, analysts pointed out that until more details about the Longxin High Speed Rail are released, it is still too early to evaluate the potential value the relevant projects will bring to Yang Zhongli's agency.
Source: Nanyang Siang Pao
Disclaimer: This content is for informational and educational purposes only, and does not constitute any specific investment, investment strategy, or recommendation endorsement. The reader shall bear any risk and responsibility arising from reliance on this content. Always conduct your own independent research and evaluation and consult professional advice if necessary before making any investment decisions. The author and related participants are not responsible for any loss or damage resulting from the use or reliance on the information contained in this article.
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